GAB Decision 782
August 28, 1986
Kansas Department of Social and Rehabilitation Services;
Docket No. 86-48
Stratton, Charles E.; Teitz, Alexander G. Garrett, Donald F.
(1) The Kansas Department of Social and Rehabilitation Services
(State) appealed a determination by the Health Care Financing
Administration (Agency) disallowing $14,446.13 in federal financial
participation (FFP) claimed for services provided in an intermediate
care facility (ICF) under title XIX of the Social Security Act (Act) for
the quarter ending June 30, 1985. The disallowance was taken pursuant
to section 1903(g)(1)(D) of the Act, which provides for the reduction of
a state's federal medical assistance percentage of amounts claimed for a
calendar quarter unless the state shows that during the quarter it had
"an effective program of medical review of the care of patients . . .
whereby the professional management of each case is reviewed and
evaluated at least annually by independent professional review teams."
Based on a validation survey, the Agency found that the State had
failed
to include in its annual medical review six patients in one ICF.
As
discussed below, we agree that the State failed to review these
six
patients and that the failure constitutes a violation of the
medical
review requirement. We, therefore, uphold the disallowance.
Factual background and arguments
The Agency assessed a disallowance for the Winfield State
Hospital
(Winfield), an ICF with over 400 beds, on the ground that the
State
failed to include in its annual medical review six Medicaid
recipients.
The record shows that Winfield was reviewed on June 30, 1985.
(State's
brief, p. 5.) All the recipients at issue had been long term
residents
of Winfield and were in residence at the time of the review.
The State admitted that it failed to review the recipients during the
June
30 review. The State asserted that the patients in question were
moved
within the facility from one ward to another, between January and
June 1985,
and the facility failed, for reasons not known to the State,
to(2) provide
the State review team with information concerning the
presence and
whereabouts of these patients. /1/
The State argued, nevertheless, that it still had in place an
effective
program for controlling utilization of services. The State
maintained
that it conducted two onsite reviews of the Winfield facility a
year,
albeit for different utilization control purposes. The State
asserted
that it conducted an annual medical review in June of each year and
a
utilization review in December.
The State maintained that although the six recipients in question had
been
missed in the June 1985 medical review, their medical records had
been
reviewed in December 1984 during a utilization review. The
State
asserted, therefore, that the annual medical review requirement for
the
recipients had been met in December 1984 with the performance of
a
utilization review and did not have to be repeated in June 1985.
While
the State conceded that the December utilization review did not
involve
observation and personal contact with the recipients, the State
argued
that such a requirement was not applicable because the
disallowance
letter did not specifically make reference to the
requirement.
Statutory and regulatory framework
Section 1903(g)(1)(D) of the Act requires the state agency responsible
for
the administration of a state's Medicaid plan to submit a written
quarterly
showing demonstrating that --
(it) has an effective program of medical review of the care
of
patients in mental hospitals, skilled nursing facilities (SNFs),
and
intermediate care facilities (ICFs) pursuant to section 1903(a)(26)
and
(31) whereby the professional management of each case is reviewed
and
evaluated at least annually by independent professional review
teams.
(Emphasis supplied)
A state's showing for each quarter must be "satisfactory" or FFP paid
to
the state for expenditures for long-stay(3) services will be
decreased
according to the formula set out in section 1903(g)(5).
Section 1902(a)(31)(B) requires in pertinent part that a State
plan
provide:
for periodic on-site inspections to be made in all . .
.
intermediate care facilities . . . within the State by one or
more
independent professional review teams . . . of (i) the care
being
provided in such intermediate care facilities to persons
receiving
assistance under the State plan, . . . (ii) with respect to each of
the
patients receiving such care, the adequacy of the services available.
.
. .
Regulations implementing the statutory utilization control
requirements
are found at 42 CFR Part 456 (1984). In particular,
section 456.652
provides that:
(a) . . . (in) order to avoid a reduction in FFP, the Medicaid
Agency
must make a satisfactory showing to the Administrator, in each
quarter,
that it has met the following requirements for each recipient:
* * * *
(4) A regular program of reviews, including medical evaluations,
and
annual on-site reviews of the care of each recipient. . . .
(b) Annual on-site review requirements. (1) An agency
meets the
quarterly on-site review requirements of paragraph (a)(4) of
this
section for a quarter if it completes on-site reviews of each
recipient
in every facility in the State . . . by the end of the quarter in
which
a review is required under paragraph (b)(2) of this section.
(2) An on-site review is required in a facility by the end of
a
quarter if the facility entered the Medicaid program during the
same
calendar quarter 1 year earlier or has not been reviewed since the
same
calendar quarter 1 year earlier. If there is no Medicaid recipient
in
the facility on the day a review is scheduled, the review is
not
required until the next quarter in which there is a Medicaid
recipient
in the facility.
(3) If a facility is not reviewed in the quarter in which it
is
required to be reviewed under paragraph (b)(2) of this section, it
will
continue to require a review in each subsequent quarter until the
review
is performed.
(4) 42 CFR 456.608 states in part:
(a) For recipients . . in SNFs and ICFs . . . the team's
inspection
must include --
(1) Personal contact with and observation of each recipient; and
(2) Review of each recipient's medical record.
Discussion
A. The December 1984 utilization review may not substitute
for the
missed medical review of June 1985.
The specific requirements for utilization reviews are set out in 42
CFR
Part 456, Subpart F, sections 456.350 through 456.438. The
requirements
for medical reviews are set out in 42 CFR Part 456, Subpart I,
sections
456.600 through 456.657. A utilization review must be
completed at
least every six months but does not require personal contact
with the
recipient. A medical review must be completed annually and
requires
personal contact and observation of each recipient in addition to
a
review of the recipient's medical records. Because the requirements
of
the medical review are different from those of a utilization review,
a
state may not use a utilization review to substitute for a
medical
review unless it fulfills during the utilization review every
distinct
requirement of a medical review for each recipient in the
facility.
The State did not allege that it had personal contact with the
six
recipients at issue when it performed a utilization review at
Winfield
in December 1984. Hence, the December 1984 utilization review
of the
facility would not serve as a facility-wide medical review, and may
not
be used by the State to substitute for the incomplete medical
review
that missed the six recipients performed in June 1985. /2/ Moreover,
we
conclude that the State may not overcome its failure to meet the
medical
review requirement in June 1985 by conducting a makeup review of
the
missed patients in October 1985. The statute and regulations
require
annual reviews, and under the facts of this case, the medical review
of
each recipient of this facility had to take place in June
1985.
Accordingly, we find that the State violated(5) the medical
review
requirement for the calendar quarter ending June 30, 1985 when it
failed
to review six recipients during its facility-wide review.
B. The disallowance letter is not a basis to reverse the
disallowance.
The State also argued that the Agency is estopped from basing
the
disallowance on its failure to observe and have personal contact
with
each recipient during the utilization review since the
disallowance
notice did not make specific reference to that
requirement. The
disallowance at issue stemmed from the State's failure
to perform a
complete medical review at the facility in June 1985. The
Agency's
disallowance letter advised the State that, during the June 1985
medical
review of the facility, it failed to perform a review of six
patients
who were identified in an attachment to the letter. The letter
then
specifically advised the State that, in addition to other
relevant
statutory and regulatory provisions cited, 42 CFR 456.606 required
an
inspection team to inspect the care and services provided to
each
recipient in each facility at least annually and 42 CFR
456.608(a)(2)
required an inspection team to review each recipient's medical
record.
This letter in no way suggests that the State could be found to be
in
compliance without meeting every applicable medical review
requirement
in the statute and regulations. The need for the Agency to
consider the
personal contact requirement for a medical review arose in
response to
the State's argument on appeal that its utilization review of
December
1984 sufficed as the requisite medical review. That may
explain why the
Agency did not specifically cite the requirement in its
disallowance
letter. /3/ The Agency, however, is not required to specify
every
element of a complete medical review in its disallowance letter and
the
letter here is fully adequate in providing the general statutory
and
regulatory grounds for the disallowance. The State clearly was
on
notice that it had to meet all applicable requirements for a
medical
review for all six recipients during the June 1985 medical
review.
Even if the disallowance letter had been found to be insufficient
notice
of the basis for the disallowance (which it was not), the State
would
not have been prejudiced here since it has had full opportunity
to
present its appeal before the Board and to demonstrate that it met
the
medical review requirement either through the June 1985 medical
review
or through its December 1984 utilization review. The Board has
found
that a grantee would not be prejudiced by insufficient notice of
the
basis of the disallowance as long(6) as there is opportunity during
the
Board's process for the grantee to respond to the correct basis for
the
disallowance. Wyoming Department of Health and Social
Services,
Decision No. 757, June 6, 1986. Moreover, as we said in
Wyoming, the
State has the ultimate burden of demonstrating compliance with
the
utilization control requirements of section 1903(g). Finally,
although
the State argued that the Agency should be "estopped" from raising
the
personal contact requirement, it failed to demonstrate whether any
of
the basis requirements for estoppel would be present in this case or
why
the doctrine of estoppel would even apply under these
circumstances.
See, e.g., Vermont Agency of Human Services, Decision No. 599,
December
10, 1984.
Conclusion
Based on the foregoing reasons, we uphold the Agency's disallowance
of
$14,446.13. /1/ The State did not argue or attempt to demonstrate
that
it made every effort to
verify information provided by the
facility with its own records. The
Board has previously held that
states have the responsibility of verifying
information provided by the
facilities, including information concerning the
status and location of
patients. North Carolina Department of Human
Resources, Decision No.
728, March 18, 1986; Virginia Department of
Health, Decision No. 682,
August 15,
1985. /2/ Since we find that the
utilization review
could not constitute a medical review because at a minimum
there was no
personal contact and observation of each patient, we do not
address the
parties' arguments relating to the composition of the reviewing
team
during the utilization
review. /3/ Nevertheless, the
Agency in a
letter stating its preliminary findings after its validation
survey,
notified the State that a number of deficiencies, including lack
of
personal contact for certain recipients, existed in the State's
review.
394 APRIL 25, 1987